Home » NEWS » Energy » Final investment decision has not been made on proposed $8 billion LNG export facility

Gulf LNG Terminal is near the city of Pascagoula. It includes a 5-mile sendout pipeline and is located at the end of State Highway 611 and is situated adjacent to the federally maintained Bayou Casotte Navigation Channel.

Final investment decision has not been made on proposed $8 billion LNG export facility

Gulf LNG Energy invested $1.1 billion in a facility in Pascagoula to import liquified natural gas (LNG), which is natural gas cooled down to liquid form to make it easier to transport. Two tanker shipments of LNG were offloaded at the facility in 2011. But then the energy world turned upside down. Shale gas production came into widespread use which completely flipped expectations of a natural gas shortage in the U.S.

The country now has an excess of natural gas.

“The United States exported more natural gas than it imported in 2017, marking the first time since 1957 that the United States has been a net natural gas exporter,” said the U.S. Energy Information Administration. “The transition to net exporter occurred as natural gas production in the United States continued to grow, reducing pipeline imports from Canada and increasing exports, both by pipeline and as LNG. Natural gas production in the United States increased significantly over the past decade. The United States surpassed Russia in 2009 as the world’s largest natural gas producer as shale gas production drove overall increases in natural gas production.”

With the boom in natural gas production in the U.S., there has been a movement by Gulf LNG Liquefaction Company, LLC (GLLC), an affiliate of Gulf LNG Energy, LLC (GLE) and Gulf LNG Pipeline, LLC, (GLP), proposing the Gulf LNG Liquefaction Project, which would add liquefaction and export capabilities to the existing Gulf LNG Terminal located in Jackson County.

Jackson County and state economic development officials would be elated to see $8 billion invested into turning Gulf LNG Energy into a terminal that could also export LNG. That would make it one of the largest economic development investments in state and county history. But this is a complex project with a lot of different players and numerous regulatory hurdles to cross to become a reality.

“We remain cautiously optimistic that the company will make a final investment decision and that it will proceed to allow exports allowing the terminal to be bi-directional,” said Jackson County Economic Development Foundation Executive Director George Freeland. “Our understanding has been and continues to be that they are in negotiations with one or a number of offtakers, companies and\or governments that would buy the gas.”

Regarding the economic impact, Freeland said they have to careful to manage expectations. That being said, the project would result in an excess of $8 billion of capital investment.

“When you are dealing with an $8 billion type number, it could be a substantial impact to the tax base of Jackson County,” Freeland said. “All of the Federal Energy and Regulatory Commission (FERC) applications and processes seem to be going well. Over the course of a number of years now, there has been steady progression as it concerns the permitting process.”

Melissa D. Ruiz, director of corporation communications for Kinder Morgan, Inc., based in Houston, Texas, said GLLC, GLE, and GLP are each owned by Gulf LNG Holdings Group, LLC, which is owned 50 percent by Southern Gulf LNG Company, LLC, an indirect subsidiary of Kinder Morgan, Inc. and the operator of the Gulf LNG Terminal, and 30 percent by Thunderbird LNG, LLC. She said Thunderbird is partially owned and controlled by GSO Capital Partners, a wholly owned subsidiary of The Blackstone Group, LP. The remaining 20 percent of Gulf LNG Holdings Group, LLC is owned nearly equally by subsidiaries of Arc Logistics Partners, LP and Lightfoot Capital Partners, LP.

Ruiz said the proposed project would include the installation of natural gas pre-treatment, liquefaction, and export facilities at the terminal with a total capacity of up to 11.5 million tonnes per annum.

“These facilities would allow the terminal to liquefy domestic natural gas delivered by pipeline, store the LNG in the terminal’s existing LNG storage tanks, and load it into LNG vessels via the terminal’s existing marine jetty,” Ruiz said. “The terminal would retain its current capability to receive, store, regasify, and deliver natural gas into the interstate pipeline system as originally constructed, thereby making the Gulf LNG Terminal bi-directional.”

The final investment decision for the proposed liquefaction project has not been reached.

“And that decision will not be made until the Front End Engineering Design is complete, requisite commercial agreements are reached (which have not been reached to date), government approvals are obtained and all necessary consents are obtained from existing customers and existing lenders,” Ruiz said.

The terminal is located at the end of State Highway 611 and is situated adjacent to the Bayou Casotte Navigation Channel. It includes a five-mile sendout pipeline. The terminal is currently permitted to receive up to 170,000 cubic meter LNG vessels and designed to handle vessels with capacities of up to 250,000 cubic meters.

Ruiz said the timeline for the proposed project is that in April 2014, GLLC awarded a contract to KBR to provide FERC engineering and FERC report pre-filing services for two liquefaction trains and associated facilities based on KBR’s proven reference design using APCI C3MR Technology. On May 21, 2014, GLLC received approval from FERC to initiate the National Environmental Policy Act (NEPA) pre-filing process and on June 19, 2015, GLLC filed its formal FERC application.

Ruiz said GLLC has responded to all outstanding FERC data requests.

“GLLC also continues to work with all other federal and local agencies to provide information necessary for related approvals,” she said.

Ruiz said the GLLC Project would be integrated with existing terminal infrastructure to minimize capital investment and project schedule. She said other significant advantages of the project include:

» Abundant and diverse natural gas supply options.

» Location within a world-class deepwater port.

» Easy access to international shipping lanes.

» An energy friendly state and supportive community.

» Strong and unmatched corporate ownership by Kinder Morgan.

Kinder Morgan is one of the largest energy infrastructure companies in North America. The company owns an interest in or operates about 85,000 miles of pipelines and 152 terminals. Their pipelines transport natural gas, refined petroleum products, crude oil, condensate, carbon dioxide (CO2) and other products, and the company’s terminals transload and store liquid commodities including petroleum products, ethanol and chemicals, and bulk products, including petroleum coke, steel and coal. Ruiz said the company is also a leading producer of CO2, which Kinder Morgan and others utilize for enhanced oil recovery projects primarily in the Permian basin.

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